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As a result of the Affordable Care Act of 2010 becoming law, individual states have been provided an option to develop a health care exchange. These public entities have been in development over the past three years and are in various stages of implementation. The ACA mandates that states provide a mechanism for individuals and employer groups be given an opportunity to purchase health insurance on an open exchange basis.

According to the Kaiser Family Foundation (KFF), states have the option of operating their own exchange or partnering with the federal government to run an exchange. States choosing neither option will default to a federally-facilitated exchange. All exchanges, regardless of how they are administered, must be ready to begin enrolling consumers into coverage on October 1, 2013 and must be fully operational on January 1, 2014. While many states have already announced their intentions, several remain undecided as to which exchange approach they will take.

The Department of Health and Human Services (HHS) recently extended the deadlines for states to make their decisions, giving states until December 14, 2012 to decide whether to run a state-based exchange, and until February 15, 2013, to opt for a partnership exchange. Even with the additional time for decision making, states opting for a state-based or partnership exchange will face challenges to making the necessary policy and implementation decisions, according to the KFF. Much more detail can be found at this site: http://www.kff.org/healthreform/upload/8213-2-2.pdf .

According to USA Today, the federal government conditionally approved eight additional states to run health exchanges on January 4, 2013, bringing the total to 20 states that will have the programs that were authorized by the 2010 federal health care law. The newly approved states that will run their own exchanges are California, Hawaii, Idaho, Nevada, New Mexico, Vermont and Utah. Arkansas will partner with the federal government for its exchange. Although states with Republican governors have fought the law, such as Texas, four of them -- Idaho, Nevada, New Mexico and Utah -- have created the exchanges.

The conditional approvals follow those issued previously granted to Colorado, Connecticut, the District of Columbia, Kentucky, Massachusetts, Maryland, Minnesota, New York, Oregon, Rhode Island and Washington to operate State-based Exchanges and to Delaware to operate a State Partnership Exchange, according to the US Department of Health & Human Services (HHS). To date, 20 states including DC have been conditionally approved to partially or fully run their marketplaces – with the remaining states having until February 15, 2013 to apply for a State Partnership Exchange. More details can be found at this site: http://www.hhs.gov/news/press/2013pres/01/20130103a.html .

Because the law known informally as “Obamacare” is politically controversial, many Republican governors and legislatures have declined to prepare for the exchanges, which go live in 2014, according to Government Executive magazine online. Conditional approval, said Gary Cohen, director of HHS’ Center for Consumer Information and Insurance Oversight, means the state’s plan is “neither approved nor denied” while the department continues overseeing each state’s ongoing activities in managing the marketplaces and helping consumers. Individuals, families and businesses who seek insurance under the law may be eligible for tax credits. “There will be future opportunities to become a state-based exchange,” Cohen added, describing an annual process that means states could apply by this November to stand up an exchange by 2015. States that opt for the hybrid approach could pursue full exchanges later on, the guidance says, according to this site: http://www.govexec.com/management/2013/01/hhs-ushers-eight-more-states-health-exchanges/60456/ .

According to the National Conference of State Legislatures, HHS also on January 4, 2013, issued new guidance to states on marketplaces that will be operated in partnership with the federal government. This guidance outlines the various options that states have to provide input and guidance, and take ownership over significant components of the operation of a FFE. The State Partnership Exchange (SPE) options provide states with a high level of participation in plan management and consumer assistance/ outreach either on a permanent basis or as they work toward a goal of running a State-based Exchange. With an SPE, states can continue to serve as the primary point of contact for issuers and consumers, and will work with HHS to establish an exchange.

The guidance outlines state functions, activities, and responsibilities for a "State Plan Management Partnership Exchange," and the "State Consumer Partnership Exchange." To operate an SPE in 2014 a state must complete the relevant portions of the Exchange Blueprint and be approved or conditionally approved by HHS for the functions and activities the state will perform. States may receive funding for the start-up year expenses for activities related to establishing an SPE. After grant funding set aside in the Affordable Care Act (ACA) for this purpose has been depleted, HHS anticipates that continued funding under a different funding vehicle will be available to support these activities. The new guidance also describes how HHS plans to integrate traditional state regulatory functions and activities into FFE operations in the absence of a partnership. More details can be found at this site: http://www.ncsl.org/issues-research/health/american-health-benefit-exchanges.aspx .

Regardless of your opinion about Obamacare, Health Exchanges, or insurance in general, the cost and complexity of finding affordable quality health care coverage is definitely increasing this year and into 2014. You’ll need very expert guidance to help navigate your way through whatever choices are in your state. Now is the time to start researching what you plan to do starting in 2014. Individuals and companies face challenges for finding the best coverage at the best price. Do your homework early, and avoid the year end rush. It’s going to be crunch time the closer you get to next year, and you’ll need to know your options before the end of this year.